Washington DC, New York, 8 November 2018 – International law firm Hogan Lovells settled charges for a registration violation with the Securities and Exchange Commission on behalf of Zachary Coburn, the founder of EtherDelta, a digital "token" trading platform, for allegedly being in violation of Section 5 of the Exchange Act. This is the SEC's first enforcement action based on findings — which Mr. Coburn neither admitted nor denied — that such a platform operated as an unregistered national securities exchange.

According to the SEC's order, EtherDelta is an online platform for secondary market trading of ERC20 tokens, a type of blockchain-based token commonly issued in Initial Coin Offerings (ICOs). The order found that Coburn caused EtherDelta to operate as an unregistered national securities exchange, according to the SEC’s press release.

Without admitting or denying the findings, Coburn consented to the order and agreed to pay US$300,000 in disgorgement plus US$13,000 in prejudgment interest and a US$75,000 penalty. The Commission's order recognizes Coburn's cooperation, which the Commission considered in determining not to impose a greater penalty.

The Hogan Lovells team was led by partners Jim McGovern and Gregory Lisa.

We’re pleased with the result,” said Hogan Lovells partner Greg Lisa. “The Commission recognized that there was no fraud involved, or even alleged; our client neither admitted nor denied the allegations; and the remedy was limited and fair. They also recognized that Mr. Coburn undertook prompt remedial acts and cooperated with the SEC. Our client appreciates being able to get this behind him.”

“The cryptocurrency market has recently faced increased scrutiny from regulators. However, this is the first time the SEC has taken action against a decentralized cryptocurrency exchange for this type of violation. This is a rapidly-changing, challenging area of the law,” said Hogan Lovells partner Jim McGovern. “Regulators will likely use this precedent to pursue others.”